GEOPOLITICS OF GLOBALIZATION: HOW THE WORLD

CHANGED AND WHY WILL CHANGE EVEN MORE

CHALLENGES FOR TEXTILE INDUSTRY

Paulo Portas

PORTO, OUTUBRO 2019

2

IMF WORLD ECONOMIC OUTLOOKGlobal growth is sluggish: it may rebound in 2020, but risks are rising

Source: IMF, October 2019.

Real GDP growth (%)

3.03.4

2.4

2.16.1 5.8

6.17.0

1.21.4

5.7

3.61.1

3.2

2.4

2.5

IMF WORLD ECONOMIC OUTLOOKGlobal Manufacturing Downturn, Rising Trade Barriers

Source: IMF, World Economic Outlook – October 2019.

OECD ECONOMIC OUTLOOKTrade uncertainty dragging down global growth

Source: OECD, Economic Outlook – September 2019. Review since May. Laurence Boone, Chief Economist, OECD.4

WB GLOBAL ECONOMIC PROSPECTSHeightened Tensions, Subdued Investment

Source: The World Bank, Economic Outlook – June 2019.5

WTO GOODS TRADE BAROMETERRevamped trade indicator shows goods trade to remain weak in Q3

6

Sustained weakness in the barometer index was driven by below trend

values in all component indices. The international air freight (91.4)

and electronic components (90.7) indices showed the strongest

deviations from trend, with readings well below the previous release.

Indices for export orders (97.5), automobile production and sales

(93.5) and agricultural raw materials (97.1) all remained below- trend

although they show signs of having bottomed out. Only the index for

container shipping (99.0) was close to the baseline value of 100.

Source: WTO, August 2019.

WTO PROJECTIONS FOR 2019-20WTO lowers trade forecast as tensions unsettle global economy

Press release – 2019 Trade Forecast, October 1st 2019

7

Note: GDP is measured at market exchange rates. Data for 2019 and 2020 are projections.

Trade and GDP – left axis; ratio of trade on GDP – right axis.

Source: WTO for trade, IMF for GDP, 2019.

World merchandise trade volume and real GDP growth, 1990-2020

-6,0

-4,0

-2,0

0,0

2,0

4,0

6,0

8,0

-15

-10

-5

0

5

10

15

20

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

Volume of world merchandise trade Real GDP at market exchange rates Ratio

THE RAPID GROWTH OF WORLD TRADEWorld exports and imports of goods and services (constant 2010 trillion USD), 1970-2018

8Source: The World Bank, 2019.

0

5

10

15

20

25

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Exports Imports

Oil crisis, 1973-74

Treaty of Maastricht, 1993

European Economic Area (internal market), 1994

China joins WTO, 2001

Financial crisis, 2007-2008

9

Source: UNCTAD secretariat calculations, based on the United Nations

Comtrade database, 2018.

Note: The node size and edge width depict export flows as a share of world

gross product. The node/edge colour reflects the commodity versus

manufacture intensity. The direction of edges is clockwise. When the exports

of a given node are less than 5 per cent of its total exports, the edges are not

reported. “Advanced Asia” refers to Australia, Japan, New Zealand, the

Republic of Korea, Singapore, Hong Kong (China) and Taiwan Province of

China.

CHANGES IN GLOBAL TRADEGlobal network of merchandise trade, selected years, 1986–2016

THE NEW SHARE OF WORLD GDPShare of global real GDP PPP (%)

10

The chart above shows the percentage share of world’s real GDP split by continents, and illustrates that the share of

world’s real GDP in the Asian region grew considerably faster than all other continents, from 16.8% in 1960 to 45.2% in

2018. Projections until 2023 show trends being reinforced.

Source: IMF, 2019.

5

18

8

45

21

0

5

10

15

20

25

30

35

40

45

50

1980 1985 1990 1995 2000 2005 2010 2015 2020

Africa North America Latin America and the Caribbean Asia and Pacific Europe

CHINA’S SHARE OF WORLD GDPShare of global real GDP PPP (%)

11

Highlighted number for 2018.

Projections for 2019-2024.

Source: IMF, 2019.

19%

15%

16%

0%

5%

10%

15%

20%

25%

30%

1980 1985 1990 1995 2000 2005 2010 2015 2020

China US EU

OLD PLAYERS AND… CHINASelected WTO Members Merchandise Trade (% global trade)

12Source: The World Bank, 2019.

0,9% 1,1%0,8%

0,6%1,0%

0,2%

1,1%

0,4%0,0%

0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

12,0%

3,6%3,2%

0,8% 0,7%

2,5%

0,2%

2,1%

1,0%

0,2%

11,7%

3,0%

0,9%

2,1%

2,9%

0,2%

2,0%

1,3% 1,2%

1980 2000 2018

21

3339

20

102

24 2620

25

124

2216

23

43

85

31

1518

15

154

Argentina Brazil Canada China EU India Japan Korea Mexico USA

Complainant Respondent

THE WORLD TRADE ORGANIZATION

AS A BATTLEFIELDDispute settlement by member, 1995-2019

13Source: WTO, 2019.

MODERN WARFARE: TRADE WARS

14

September 5, 2019

US and China agree to restart trade talks next month

The visit to Washington by top Beijing officials is set for early

October.

Stock markets in Asia welcomed the news. The CSI 300

benchmark of Shanghai- and Shenzhen-listed stocks closed up 1

% and Japan’s Topix ended the day 1.8 % higher.

In August, Mr Trump ramped up the trade war dramatically with

China, imposing 10% tariffs on another US$300 billion of Chinese

goods starting September 1. China also moved to retaliate with

up to US$185 billion in tariffs on US goods.

In return for a series of modest concessions, most of which had

been offered by President Xi Jinping’s administration in previous

negotiating rounds, Donald Trump agreed to suspend another set

of tariff increases originally scheduled to take effect on October

15.

Source: FT, 2019.

USD 550 bn

on China

USD 185 bn

on the US

THE WORLD’S LARGEST COMPANIES

Company Revenue ($M) Country

General Motors 126,974 USA

Ford Motor 96,933 USA

Exxon 86,656 USA

IBM 63,438 USA

General Electric 55,264 USA

Mobil 50,976 USA

Altria Group 39,069 USA

Chrysler 36,156 USA

DuPont 35,209 USA

Texaco 32,416 USA

Company Revenue ($M) Country

Walmart 500,343 USA

Sinopec Group 348,903 China

R. D. Shell 326,953 The Netherlands

China N. Petrol. 326,008 China

State Grid 311,870 China

Saudi Aramco 265,172 Saudi Arabia

BP 260,028 UK

Exxon Mobil 244,582 USA

Volkswagen 244,363 Germany

Toyota Motor 242,137 Japan

15

The world’s 500 largest companies generated $32.7 trillion in

revenues and $2.15 trillion in profits in 2018. Together, this year’s

Fortune Global 500 companies employ 69.3 million people

worldwide and are represented by 34 countries.

Source: Fortune Global 500, 2019.

1990 2019

➢ For the first time, since 1945, there are more Chinese firms in the

world’s top 500 ranking, than American.

➢ In global value (assets), Americans represent 28.8%, Chinese firms

represent 25.6%.

➢ 6 out of 10 fastest companies are Chinese.

THE NEW ECONOMY MEANS…

16

The world’s largest

taxi company owns

no cars

The largest

accommodation

provider owns no

real estate

The most popular

media provider

creates no content

The most valuable

photo company

sells no cameras

The largest movie

place owns no

cinemas

The largest

software vendor

doesn’t write the

apps

The most valuable

retailer has no

stores*

(*Amazon Go may change this)

The largest phone

company has no

telco infrastructure

E-WORLD: GUESS WHO?Market capitalization of the largest internet companies worldwide

17

In billion US dollars. As of September 3rd 2019

Note: Ant Financial projected valuation expressed in view of its potential IPO.

Source: YCharts, 2019.

1 038

930

885

811

521

449

404

150

134

127

126

Microsoft

Apple

Amazon.com

Google/Alphabet

Facebook

Alibaba

Tencent

Ant Financial

SalesForce.com

Netflix

PayPal

THE GLOBAL COMPETITION FOR DATA

18

Source: Le Monde, 2018.

Sources of EU debate:

• Tax digital

services?

• Filter or remove

copyrighted

material from

websites (Article

13)?

• Tackle fake news?

• Monitor hate

speech?

• Reinforce

cybersecurity

against terrorism?

• Tackle political

campaign

manipulation?

19

ONLINE PLATFORMS: AMERICA VS ASIAMARKET VALUATIONS In billions US dollars

Source: Dr. Holger Schmidt (TU Darmstad/Netzoekonom.de) December 2018

Source: World Intellectual Property Organization, Nikkei,2019.

The WIPO finds that China now accounts for 21% of global patent applications. That's right

behind the long-time leader US at 22% in 2018, down from 29% in 2017.

If current trends continue, China could surpass the US for patent filings within 2 years. Just

a decade ago, China was ranked 7th worldwide for number of patent applications.

21Source: OECD, 2019.

CHINA’S GAINING MOMENTUMGross domestic spending on R&D. Total, % of GDP, 2000 – 2018.

GLOBAL CHALLENGESNATURAL RESOURCES FOR A NEW ECONOMY

The case of rare earths

Applications

Source: UNCTAD, US Geological Survey, Statista, 2018.

22

ESTIMATED CHANGES IN 2050The US and Europe losing ground to emerging Asia

23

RISK REGIONS# PERSIAN GULF # SOUTH CHINA SEA

Oil Tankers’ Tracking Signals Are Vanishing in the Strait of

Hormuz

# KOREAN PENINSULA # KASHMIR

US military raised frequency of transport movements

through the strategic waterway

South Korea’s Moon calls for peace with North Korea by 2045 India revokes Kashmir's special status

25Source: The Global Risks Report, WEF, 2019.

THE BIGGEST RISKS

THE WORLD FACESWORLD ECONOMIC FORUM 2019

26

Source: The Global Risks Report, WEF, 2019.

SHORT-TERM RISK OUTLOOKPercentage of respondents expecting risks to increase

64

67

69

72

73

80

82

85

88

91

Major risks include a growth recession

in China, a rise in global long-term

real interest rates, and a crescendo of

populist economic policies that

undermine the credibility of central

bank independence, resulting in

higher interest rates on safe,

advanced-country government bonds.

3,1

2,1

-10

-8

-6

-4

-2

0

2

4

6

8

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

IS THE ECONOMY GREAT AGAIN?

27

Source: US Bureau of Economic Analysis, 2019.

Real GDP (% change from previous period), seasonally-adjusted at annual rates

Real GDP grew at 2.1% in Q2, after increasing at 3.1% in Q1.

-3,1%

-3,8%

-4,2%

-4,4%

-2,8%-3,1%

-3,2%

-2,8%

76%78% 78%

93%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-6,0%

-5,0%

-4,0%

-3,0%

-2,0%

-1,0%

0,0%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Fiscal Deficit (-) or Surplus (left axis) Net Exports of Goods and Services (left axis) Debt Held by the Public (right axis)

28

BUDGETARY OUTLOOKFISCAL EXPANSIONISM

Source: US Congressional Budget Office, 2019.

Pro

jecti

on

s

Ob

am

a A

dm

inis

tra

tio

n

“IT’S THE ECONOMY, STUPID”

29Source: Bruce Mehlman, 2019.

DEGLOBALIZATIONfrom 1914 until 1947

Average Tariff Rates on Total Imports, 1830-2010

Great Depression

GATT’47

Source: Albert H. Imlah, Economic Elements, 2011.

30

“The Smoot-Hawley Tariff Act was initially

to safeguard US farmers from external

agricultural products.

Despite the good intentions behind it, the

act did not end up well at all. American

imports fell from $1.33bn in 1929 to

$390m in 1932, and exports decreased

from $2.34bn in 1929 to just $784m in

1932.

The first phenomenon was caused by the

higher level of American duties that

increased foreign companies’ costs and

consequently pushed up the price of their

products.

The latter was due to the retaliation of

America’s trade partners, who increased

their own tariffs on American goods – the

subsequent fall in US exports led to fewer

jobs in the USA.”

Source: Protectionism in America: An Overview, 2017.

THE CONSEQUENCES OF PROTECTIONISMin the past…

31

OTHER FORMS OF PROTECTIONISM

The Buy American Act (1933)

applies to all US federal

government agency purchases

of goods valued over the micro-

purchase threshold, but does

not apply to services.

The Buy America Act (1983)

provisions are applied to

transit-related procurements

valued over USD 100,000, for

which funding includes grants

administered by the Federal

Transit Authority (FTA) or

Federal Highway

Administration.

(Both these have exceptions, exemptions

and waivers, namely by executive decision.)

32

GIVE ME YOUR FUTURE MILLIONNAIRESHow immigration boosts capitalism

Immigrants and their children

have founded 45% of the U.S.'

Fortune 500 companies

Fortune 500 companies

founded by immigrants or

their children employ 13.5

million people

On average, they employ 11%

more people than the average

Fortune 500 company with a

nonimmigrant founder

The share of successful US

companies that have

immigrant founders is

growing, despite the Trump

Administration making it

more difficult for immigrants

to come to the US

Source: New American Economy Research Fund, 2019. 33

55%25%

20%

THE COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR

TRANS-PACIFIC PARTNERSHIP

On 8 March 2018 in Santiago, Chile, the CP TPP was formally

signed by 11 countries, making it the third largest free trade area

in the world by GDP (12% of world GDP), after NAFTA and the EU.

Critics:

• CPTPP may only benefit developed economies and large

companies (opening up to foreign markets)

• Higher exports to do not mean necessarily more

development (need high content of domestic value-added)

• Labour standards may lead to growth in informal sector 34

THE GREAT AMERICAN POWERShare of currencies in global foreign exchange reserves from 2000 to 2018

35

0%

10%

20%

30%

40%

50%

60%

70%

80%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

U.S. dollar Euro Pound sterling Japanese Yen Chinese renminbi Other currencies

Source: IMF, 2019.

THE GREAT AMERICAN POWERThe US spends more on Defense than the next seven countries combined

36

POLITICAL STRESS AND RISK

37Source: Vinciamo, 2019.

Brexit

Tension

with

Russia

Migration

Tension

with

Turkey

Terrorism

Growth

Populism

Demography

Sovereign debt

Energy

dependency

East

back to

the East

Separatisms

38

EU ECONOMIES GROWING AT DIFFERENT SPEEDS

-0,20

-0,1

-0,1

0

0,2

0,2

0,2

0,2

0,2

0,3

0,4

0,5

0,5

0,5

0,5

0,7

0,7

0,7

0,8

0,8

0,8

0,8

0,8

0,8

1

1,1

1,3

United Kingdom

Germany

Sweden

Italy

EU28

Belgium

Croatia

Austria

Slovenia

France

Estonia

Spain

Netherlands

Portugal

Finland

Czechia

Ireland

Latvia

Bulgaria

Denmark

Greece

Cyprus

Lithuania

Poland

Romania

Hungary

Malta

Data for LU and SK not available.

Source: Eurostat, September 2019.

Real GDP growth (in %), 2019 Q2

Champions

Laggards

Non satisfactory

Satisfactory

39

GERMANY’S CAR INDUSTRY DEADLOCK

Source: Financial Times, 2019.

40

GERMANY’S MANUFACTURING SECTOR

STRUGGLES

Source: Financial Times, 2019.

41Impact in a 15-year horizon.

Source: The Guardian, November 28th 2018.

THE IMPACT OF THE UNCERTAINTY OF BREXIT IN THE ECONOMY (1)

UK significantly worse off under all Brexit scenarios…

42Source: Financial Times, August 2019.

THE IMPACT OF THE UNCERTAINTY OF BREXIT (2)THE UK ECONOMY CONTRACTED IN THE SECOND QUARTERQuarter-on-quarter % change

“WHATEVER IT TAKES”ECB's benchmark interest rates

43Sources: European Central Bank, 2019.

Africa’s young and growing population can become a powerful

growth engine for the continent – provided there is an

investment in education, health care and welfare. Africa’s

population growth will account for approximately 58% of the

global increase between 2018 and 2050.

44Source: World Population Prospects, 2019.

AFRICATHE NEW DEMOGRAPHIC GIANT

Source: Twitter, 2019.

GETTING (SERIOUSLY) OLDER

45

Population median age (years)

Source: European Parliamentary Research Service, 2013.

EUROPE AND THE REST OF THE WORLD

46Source: Bill and Melinda Gates Foundation, 2019.

By 2100, it’s projected that nearly half of the world’s children aged 0-4 years old

will be in Sub-Saharan Africa

PRODUCTIVITY IS FAILING IN DEVELOPED ECONOMIESAverage growth (output per hour) in each decade

47

Source: The Conference Board / FT

Source: Ipsos Global Trends (2016), The Global Risks Report – WEF, 2019.

LIFE PROSPECTS

48

EU TRADE AGREEMENTSTrade for all: 40 trade agreements with 70 countries

49Source: European Commission, 2019.

Trade and Investment

Signed on 30 June 2019.

99% tariffs eliminated. 65%

import duties eliminated at

entry into force; remaining

gradually over 10 years.

EU-MX Trade Agreement

Political agreement on April

21st 2018. Full legal text to

be finalized by year end.

Customs, climate-change

and tackling corruption as

part of the deal.

EU-Mercosur FTA

Negotiations started in 1999 and

resumed in 2016, after long

pause. Agreed in principle in June

2019. Removes majority of tariffs

on EU exports (saves €4bn in

duties) and preserves 355 EU

geographical indications.

EU-China Investment Agreement

Negotiations started in 2013, to

remove market access barriers to

investment. It will replace bilateral

investment agreements.

Last round in June 2019, in

Beijing. Next to be defined.

EU-AU Trade Agreement

Negotiations launched in

June 2018. The EU is

Australia’s 2nd biggest trade

partner. Farming and

geographical indicators are

pending topics. Last round in

July 2019.

Free Trade Agreement and

Investment Protection Agreement

The agreement with Singapore

removes nearly all customs duties

and gets rid of overlapping

bureaucracy, stimulates green

growth and promotes investment.

Signed on October 19th 2018.

EU-South Korea Trade Agreement

(Modernization)

Agreement signed in 2011.

Amended in 2014 to allow Croatia

to benefit from the deal. All import

duties removed, since July 2016.

EU-Chile Trade Agreement

(Modernization)

The EU and Chile concluded an

Association Agreement in 2002,

which includes a comprehensive

Free Trade Agreement.

Renegotiation was launched on

16/11 2017 in Brussels. Ongoing.

CHINA TRENDS IN 2019From high-speed to high-quality growth

China’s economy slowed from 6.9% in 2017 to

6.6% in 2018, mainly due to financial regulatory

tightening in banking activity, and as a result of

the widening trade dispute with the US. Further

deceleration is projected for 2019 and 2020

(6.2% and 6.0%, respectively).

Reforms progressed in several key areas: 1)

strengthening financial regulations; 2) control

local government investment; 3) reduce pace of

debt accumulation; 4) new FDI law (and revision

of the list of FDI entry). The deficit of the general

government sector is estimated at 11% of GDP.

If trade tensions escalate further, additional

stimulus, mainly fiscal, would be warranted.

The global economy would benefit from a more

open, stable, and transparent, rules-based

international trade system. China can also

benefit from further opening up and other

structural reforms that enhance competition.

Source: IMF Article IV, August 2019.Source: OECD, September 2019.

51

THE MIX OF KEYNES AND HAYEKHow China is facing economic slowdown

Source: China Daily - National Bureau of Statistics, Government Work Report, Ministry of Human Resources and Social Security, 2019

A “CENTURY OF HUMILIATION”Intervention by Western powers and Japan, 1839-1949

The term itself was first coined in 1915 in

response to Japan’s 21 Demands, relating to

a period starting from the First Opium War

(1839-42) and including the “Unequal

Treaties”.

Both Chiang Kai-shek and Mao

Zedong declared the end of the Century of

Humiliation in the aftermath of World War II.

A “narrative as a magnificent civilisation

uniquely threatened by immoral barbarians,

the innocent and blameless victim of

international bullying and unwarranted

imperialism”.

52

DENG XIAOPINGthe father of modern China

Author of the reforms that made China a global

superpower.

The 4 modernizations: agriculture, industry,

science and defence.

The “Beijing Consensus”: economic freedom

versus political one.

“With Deng’s reforms, China changed in 40

years what other countries changed in 400” –

Yu Hua, writer.

The normalisation of China-US relationship

(Xioaping-Carter, 1979).53

(and about Deng Xiaoping)

“China lived 100 years of humiliation,

30 years of mistakes and 30 years of

reforms and staggering growth.” –

by a member of CPC, according to a

former French ambassador to Beijing

“Wealth is glorious.” – attributed to Deng Xiaoping.

“It doesn't matter whether the cat is black or white, as

long as it catches mice.”

“China must keep it’s light dim, waiting it’s time.”

XI JINPINGthe accelerator

If Deng was the reformer, Xi is the accelerator.

The fifth generation – whose formative experiences

were shaped during the Cultural Revolution – arrives

to power.

Xi’s own family story helps to explain his vision.

The policy of the Four Comprehensives:

➢ building a moderately prosperous society;

➢ deepening reform;

➢ advancing the rule of law;

➢ strictly governing the Communist Party of China.

A new model for growth - Made in China 2025:

❖ Move away from world’s factory to high value products;

❖ Goal of 70% Chinese content of core materials by 2025;

❖ USD 300b to invest in high-tech sectors (pharma, auto,

space, semiconductors, IT, robotics) to counter reliance

on foreign firms;

❖ Compete with the US globally. 54

After 3 years, we will win the final

phase of the war on poverty.

This will be the first time in thousands

of years of Chinese history that

extreme poverty has been eliminated.

January 4th 2018

Chinese copy, they don’t invent

WRONG WESTERN PERCEPTIONSabout China

55

China will be old, before it becomes rich

With China in the WTO, Western products will flow into China

Economic freedom will surely bring political freedom

CHINA’S DIGITAL ECONOMYA story of commercial success

56Source: McKinsey, 2018.

CULTURAL EXCHANGES: TOURISM

57Source: World Tourism Organization UNWTO, 2019.

Beyond Greater China, it is largely the economies of other Asian countries reaping the benefit of the rapid growth in outbound travel. Thailand,

Japan, Vietnam, South Korea and Singapore are also among the top 10 destinations for Chinese tourists. The US and Italy complete the list.

IMPRESSIVE RISINGbut some problems remain

58

AGEING

POPULATION

INTERNET

CONTROL

CONCENTRATION

OF (NEW) WEALTH

EXIT

OF CAPITALPOLLUTION

140,000 PROTESTS

EVERY YEARHONG KONG(VS. SHENZHEN)

TAIWANELECTIONS IN 2020

STATE OWNED

ENTERPRISES

CAPITALIZATION

OF PUBLIC BANKS

LABOUR

PRODUCTIVITY

CLANDESTINE

(CATHOLIC) CHURCHES

MINORITIES

(55 ethnicities)

e.g. UYGHURS

PREJUDICE

AGAINST

FOREIGN INVESTMENT

(BOTH WAYS)

34tr USD OF DEBT

(PUBLIC AND PRIVATE)

SILK ROADS: UNEQUAL RECIPROCALITY? (I)Investment regimes in China and in Europe

59Source: Ministry of Commerce, People’s Republic of China, 2019.

Chinese treatment of EU investors

EU treatment of Chinese investors

Exploration and exploitation of oil and natural gas Joint venture only No restrictions, invited by GR

Printing of publications Minority only No restrictions

Manufacturing of complete automobiles Max. 50%No restrictions, acquisition of Volvo

Repair, design and manufacturing of ships Minority only No restrictions, activities in GR

Aircraft design and production Minority only No restrictions

Production of satellite TV broadcasting Minority onlyNo restrictions, CCTV in multiple countries

Nuclear power stations Minority onlyNo restrictions, activities in the UK

Construction and operation of power grids Minority onlyNo restrictions, activities in ES and PT

Construction and operation of network of railways Minority only No restrictions, activities in HU

Construction and operation of civil airports Minority only No restrictions, invited by GR

Telecommunication companies Minority only No restrictions, activities in EU

Banks Max. 20% No restrictions, activities in EU

Insurance companies Max. 50% No restrictions, activities in EU

SILK ROADS: DIFFERENT STRATEGIES (II)The dependence of China’s manufacturing sector on exports

60Source: UNCTAD; China Department of Statistics; Eurostat; Conference Board, 2019.

Chinese and EU exports to third countries vs competitiveness indicators

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Manufacturing value added (USD billion) 893 1.149 1.475 1.611 1.925 2.330 2.555 2.779 2.928 3.104

Net manufacturing exports (USD billion) 312 443 583 422 534 659 765 810 917 982

Manufacturing export dependence (%) 35 39 39 26 28 28 30 29 31 32

Share of foreign companies in China’s manufactured exports (%)

47 48 46 46 45 44 43 41 40 36

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Labor costs China 100 119 139 155 175 200 224 247 270 297 n.a.

EU 100 104 104 102 107 109 114 117 120 124 n.a.

Total factor productivity

China 100 104 107 106 106 111 112 110 111 111 109

EU 100 101 101 99 95 96 96 95 95 95 95

Export to third countries

China 100 123 144 124 161 196 218 239 252 248 227

EU 100 114 127 104 123 145 147 154 156 142 138

SILK ROADS: THE FOCUS IN R&D… (III)R&D spending in manufacturing (USD bn, PPP)

61Source: OECD, 2019.

2008 2009 2010 2011 2012 2013 2014

EU 119 117 120 130 137 142 151

China 93 114 135 162 194 224 253

US 204 195 197 201 208 221 233

Sector-wide average 2013-14

Machines Cars Planes, ships, trains Pharma

EU 16 32 10 14

China 26 19 11 10

US 14 12 19 49

THE QUESTION OF HONG KONGOne people, two identities

62Source: The Economist, August 2019.

THE MOST RAPID SHIFT

IN THE WORLD’S ECONOMIC CENTER OF GRAVITYEvolution of the earth’s economic center of gravity (AD 1 to 2025)

63

The economic center of gravity is calculated by weighting locations by GDP in 3 dimensions and projected to the nearest point on

the earth’s surface. The surface projection of the center of gravity shifts north over the course of the century, reflecting the fact that

in 3-dimensional space America and Asia are not only “next” to each other, but also “across” from each other.

Source: McKinsey Global Institute analysis using data from Angus Maddison; University of Groningen, 2018.

GEO POLITICS OF GLOBALIZATION: HOW THE WORLD

CHANGED AND WHY WILL CHANGE EVEN MORE

CHALLENGES FOR TEXTILE INDUSTRY

Paulo Portas

PORTO, OUTUBRO 2019